Cameco announces Cigar Lake 2016 production outlook

07 January 2016

Cameco expects the Cigar Lake operation to produce 16 million pounds of packaged uranium concentrate (U3O8) - equivalent to 6154 tU - in 2016, the company announced yesterday. Full achievement of the production outlook will depend on regulatory approvals to increase the production at the McClean Lake mill, where ore from Cigar Lake is milled and packaged.

Underground tunnels at Cigar Lake (Image: Cameco)

Mining began at Cigar Lake in 2014, nine years after construction first began, and the McClean Lake mill produced its first packaged uranium concentrate from Cigar Lake ore later that year. The mine was declared in commercial operation in May 2015.

The mine achieved its initial 2015 production target range - 6 million to 8 million pounds U3O8 (2308 to 3077 tU) - during the third quarter of the year. Full 2015 production will be reported in the company's fourth quarter results, due to be released on 5 February 2016.

McClean funds Denison exploration

Denison plans to spend $13 million on its Canadian exploration and evaluation activities this year. Denison CEO David Cates announced that the company's 2016 financial plan is "funded", citing a "significant increase" in toll milling revenue expected from McClean Lake, where ore from Cameco's Cigar Lake project is processed. 2016 revenue from McClean Lake operations and uranium sales is expected to be $5.4 million.

With an average ore grade of 17.8% U3O8, Cigar Lake, in northern Saskatchewan, is claimed by Cameco as the highest-grade uranium mine in the world. Located at depths of 410 metres to 450 metres below the surface, the orebody is at the boundary between dry basement rock and water-bearing sandstone, meaning that the orebody must be frozen before mining to prevent water from entering the mine workings and to stabilize weak rock formations. A high-pressure water jet is then used to mine out cavities in the frozen ore in a technique called jet boring. Thickened ore slurry is pumped to the surface and transported in tanker trucks 70 kilometres to the McClean Lake mill where it is processed into uranium concentrate.

McClean Lake, majority owned and operated by Areva Resources Canada Inc, is currently licensed to produce up to 13 million pounds U3O8 (5000 tU) per year. A program to increase its total capacity to about 24 million pounds per year (9200 tU) has been funded by the Cigar Lake joint venture.

"Areva plans to submit an application to the Canadian Nuclear Safety Commission to increase the mill's annual production limit," Cameco said. "Full achievement of the 2016 production outlook for Cigar Lake is subject to securing regulatory approvals necessary to increase mill production," the company added.

The McClean Lake mill started operations in 1999, processing ore from the McClean Lake open pit mines until mining was completed in late 2008. The mill has since been upgraded and expanded to accommodate ore from the Cigar Lake mine, and was recommissioned in 2013. Areva describes the mill, which is capable of processing uranium ore grades from less than 1% to 30% uranium without dilution, as the most technologically advanced uranium mill in the world. Its current operating licence expires in 2017.